By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas' national debt fell back close to the $12bn mark at end-March 2025, it was revealed yesterday, amid suggestions that the Government had refinanced around $700m of its existing bonds.

Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business he had been informed by Wall Street contacts that The Bahamas had enjoyed "a good day" on the international markets after its week-long offer to repurchase up to $2.2bn of its outstanding bonds - spread across six issues - in exchange for cash drew strong investor interest.

Disclosing that information he had received suggested the offer was "oversubscribed", he added: "This is a very significant development for the country. When Wall Street talks about you like this, this is a different thing. This is no time for petty partisan politics.

"The real key to this is the level of confidence. The Government keeps doing things. We have to get beyond this 'junk bond' status, and today is a step in the right direction. This is a significant day for the country, a significant day."

Neither Michael Halkitis, minister of economic affairs, nor Simon Wilson, the Ministry of Finance's financial secretary, responded to Tribune Business calls and messages seeking comment last night, so it could not be confirmed whether investors have offered to part with a combined $700m in outstanding Bahamian government bonds in return for a cash payment.

The Central Bank, meanwhile, in its report on economic developments during the three months to end-March 2025 revealed that the national debt, which includes contingent liabilities such as guarantees provided by the Government to underwrite loss-making state-owned enterprises (SOEs), had fallen by $53.5m during what is traditionally a revenue and surplus-rich period for the Public Treasury.

"The direct charge on the Government declined by $48.9m (0.4 percent) over the quarter ended March 2025 to $11.708bn. However, on an annual basis it rose by $194.1m (1.7 percent). A disaggregation by currency revealed a continued majority of the debt in Bahamian dollars (54.7 percent), with the balance in foreign currency (45.3 percent)," the banking regulator said.

"The Government’s contingent liabilities decreased by $4.6m (1.4 percent) over the review quarter, and by $13.1m (4.6 percent) year-on-year to $329.9m. As a consequence, the national debt, inclusive of contingent liabilities, declined by $53.5m (0.4 percent) over the three-month period, and by $181m (1.5 percent) on an annual basis to $12.039bn as at end-March 2025.

"As a fraction of GDP, the direct charge declined by an estimated 1.4 percentage points on a yearly basis to 74 percent at end-March. In addition, the national debt-to-GDP decreased to an estimated 78.4 percent from 80 percent in the same quarter of 2024."

The Prime Minister during his Budget address laid out several economic indicators that the Government is targeting to achieve its ambition of returning The Bahamas to ‘investment grade’ status by the 2028-2029 fiscal year.

These include a 13.1 percent, or $5,100, increase in Bahamian per capita gross domestic product (GDP) to $44,000 by 2029, plus a more than 50 percent reduction - in percentage terms - in the Government’s debt interest expense as a percentage of GDP within the same timeframe.

Mr Davis, adding that the Government also expects to be “near” its 50 percent debt-to-GDP target by the 2028-2029 fiscal year, some two years ahead of its 2030-2031 goal, said: “This administration remains resolute in its commitment to securing an investment grade credit rating within the next three years, starting in the upcoming fiscal year, 2025-2026.

“Achieving this milestone by fiscal year 2028-2029 is not merely symbolic; it is a strategic imperative that will unlock greater economic opportunity, reduce borrowing costs and enhance investor confidence in our nation’s future....

“With our GDP projections expected to fully capture economic activity within the next three years, we have confidently set the following targets to reach ‘investment grade’ status. GDP per capita has risen by 27.7 percent, increasing from $30,400 in 2021 to $38,900 in 2024. On a year-over-year basis, it grew by 2.7 percent, up from $37,900 in 2023,” he added.

“Based on regional benchmarks, long-term growth prospects and the current economic environment, we are targeting an annual GDP per capita of approximately $44,000 by 2029.” The Bahamas is presently some four notches below ‘investment grade’ status with the rating agencies, having been marooned in ‘junk’ status for some years.

Mr Davis, identifying the Government’s revenue-to-GDP ratio, or its percentage of economic output, as another targeted indicator, said: “Revenue-to-GDP has also improved significantly, rising from 17 percent in fiscal year 2020-2021 to 19.7 percent in fiscal year 2023-2024. For the current fiscal year, as previously planned, we had set a target of 22.1 percent.

“To meet the requirements of an investment grade rating we must continue to enhance our revenue mobilisation efforts. Accordingly, we project that total revenue will reach 23.5 percent of GDP in fiscal year 2025-2026 and increase to 25 percent thereafter.”

The Prime Minister added that “international best practices” showed a country’s debt should not exceed half its economic output or GDP. The Bahamas’ debt-to-GDP ratio stood at 72.4 percent at end-June 2024, and Mr Davis added: “The Fiscal Strategy Report 2025 outlines our commitment to reducing the central government debt-to-GDP ratio to 50 percent by fiscal year 2030-2031.

“Based on internal estimates and expected policy changes, we expect to be near this target by fiscal year 2028-2029. In addition to reducing the size of our debt, we are also focusing on reducing the cost of carrying it.

“In fiscal year 2020-2021, interest expense accounted for approximately 22.1 percent of total government revenue, decreasing to 20 percent in fiscal year 2023-2024. Our objective is to further reduce this ratio to 10 percent by fiscal year 2028-2029.”